ISA (NZ) 210

Agreeing the Terms of Audit Engagements

Mandatory Date:
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Statement of Authority

INTERNATIONAL STANDARD ON AUDITING (NEW ZEALAND) 210

Agreeing the Terms of Audit Engagements (ISA (NZ) 210)

Effective for audits of historical financial statements for periods beginning on or after 1 September, 2011.

This Standard was issued by the New Zealand Auditing and Assurance Standards Board of the External Reporting Board pursuant to section 24(1)(b) of the Financial Reporting Act 1993. This Standard is a disallowable instrument for the purposes of the Legislation Act 2012.

This compilation was prepared in February 2024 and incorporates amendments up to July 2023

 

Copyright

© External Reporting Board (“XRB”) 2011

This XRB standard contains copyright material and reproduces, with the permission of the International Federation of Accountants (IFAC), parts of the corresponding international standard issued by the International Auditing and Assurance Standards Board (“IAASB”), and published by IFAC. Reproduction within New Zealand in unaltered form (retaining this notice) is permitted for personal and non-commercial use subject to the inclusion of an acknowledgement of the source.

Requests and enquiries concerning reproduction and rights for commercial purposes within New Zealand should be addressed to the Chief Executive, External Reporting Board at the following email address: enquiries@xrb.govt.nz

All existing rights (including copyrights) in this material outside of New Zealand are reserved by IFAC, with the exception of the right to reproduce for the purposes of personal use or other fair dealing. Further information can be obtained from IFAC at www.ifac.org or by writing to permissions@ifac.org

ISBN 978-1-927174-01-2

 

How to Read this Standard

International Standard on Auditing (New Zealand) (ISA (NZ)) 210, “Agreeing the Terms of Audit Engagements” should be read in conjunction with ISA (NZ) 200, “Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing (New Zealand).”

 

Table of pronouncements – ISA (NZ) 210 Agreeing the Terms of Audit Engagements

This table lists the pronouncements establishing and amending ISA (NZ) 210.

Pronouncements

Date approved

Effective date

International Standard on Auditing (New Zealand) 210

July 2011

This ISA (NZ) is effective for audits of historical financial statements for periods beginning on or after 1 September 2011.

International Standard on Assurance Engagements (New Zealand) 3410 Assurance Engagements on Greenhouse Gas Statements

December 2012

31 March 2013.

Professional and Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners

Jan 2013

Effective on 1 January 2014.

Use of management and those charged with governance

Dec 2013

Effective for audits of financial statements for periods beginning on or after 1 July 2014.

Amendments to the Auditing and Assurance Standards: Omnibus Amendments (Legislative Update)

February 2014

Effective for audits and assurance engagements for periods beginning on or after 1 April 2014.

Amendments to the International Standards on Auditing (New Zealand) to Describe the Responsibilities of Those Charged with Governance

September 2015

Effective for audits of financial statements for periods ending on or after 15 December 2016.

Amendments to the International Standards on Auditing (New Zealand) (ISAs (NZ)) on Auditing Financial Statement Disclosures

September 2015

Effective for audits of financial statements for periods ending on or after 15 December 2016.

Conforming amendments to ISAs (NZ) and other pronouncements (Auditor Reporting)

September 2015

Effective for audits of financial statements for periods ending on or after 15 December 2016.

Conforming Amendments to ISAs (NZ) and Other Pronouncements

October 2016

Effective for audits of financial statements for periods ending on or after 15 December 2017.

Conforming Amendments to Auditing and Assurance Standards as a result of the revised Professional and Ethical Standard 1

June 2020

Effective on 15 July 2020.

Conforming and Consequential Amendments to International Standards on Auditing (New Zealand) Arising from ISA (NZ) 315 (Revised 2019)

February 2020

Effective for audits of financial statements for periods beginning on or after 15 December 2021.

Conforming Amendments to International Standards on Auditing (New Zealand) and Other Pronouncements Arising from the Quality Management Projects

July 2021

Effective for audits of financial statements for periods beginning on or after 15 December 2022.

Amendments to Auditing and Review Engagement Standards as a Result of the Revisions to Financial Reporting Standards

May 2023

Mandatory date of 1 January 2023.

NZ AS 1 (Revised) The Audit of Service 
Performance Information

July 2023

Mandatory date of 1 January 
2024.

 

 

Table of Amended Paragraphs in ISA (NZ) 210

Paragraph affected

How affected

By…[date]

Various

Terminology changed

ISAE (NZ) 3410 [Dec 2012]

NZ21.1

Amended

Professional and Ethical Standard 1 (Revised) [Jan 2013]

Various

Amended

Use of management and those charged with governance [Dec 2013]

19, A8, A15, Appendix 1

Amended

Amendments to the Auditing and Assurance Standards: Omnibus Amendments (Legislative Update) [Feb 2014]

NZ A8.1

Inserted

Amendments to the Auditing and Assurance Standards: Omnibus Amendments (Legislative Update) [Feb 2014]

NZ1.1, Illustrative engagement letter

Amended

Amendments to the International Standards on Auditing (New Zealand) to Describe the Responsibilities of Those Charged with Governance [Sept 2015]

A11, NZA24.1, Appendix 1

Amended

Amendments to the International Standards on Auditing (New Zealand) (ISAs (NZ)) on Auditing Financial Statement Disclosures [Sept 2015]

NZ10.1, NZA8.1, NZA24.1, Appendix 1

A20, A25

Amended

 

Inserted

Conforming amendments to ISAs (NZ) and other pronouncements (Auditor Reporting) [Sept 2015]

A26

Amended

Conforming Amendments to ISAs (NZ) and Other Pronouncements [Oct 2016]

NZ21.1

Amended

Conforming Amendments to Auditing and Assurance Standards as a result of the revised Professional and Ethical Standard 1 [June 2020]

A16 and A18

Amended

Conforming and Consequential Amendments to International Standards on Auditing (New Zealand) Arising from ISA (NZ) 315 (Revised 2019)

1, A1

Amended

Conforming Amendments to International Standards on Auditing (New Zealand) and Other Pronouncements Arising from the Quality Management Projects [July 2021]

Appendix 1

Amended

Amendments to Auditing and Review Engagement Standards as a Result of the Revisions to Financial Reporting Standards [May 2023]

NZ A8.1 

Amended 

NZ AS 1 (Revised) The Audit of Service Performance 
Information [July 2023]

Scope of this ISA (NZ)

1. This International Standard on Auditing (New Zealand) (ISA (NZ)) deals with the auditor’s responsibilities in agreeing the terms of the audit engagement with management and, where appropriate, those charged with governance. This includes establishing that certain preconditions for an audit, responsibility for which rests with management and, where appropriate, those charged with governance, are present. ISA (NZ) 220 (Revised)1 deals with those aspects of engagement acceptance that are within the control of the auditor. (Ref: Para. A1)

NZ1.1 In New Zealand, those charged with governance generally have responsibility for ensuring an entity meets its legal obligations in relation to the preparation of the financial statements. In these cases the process of financial reporting is usually delegated to management, but the responsibility for such matters remains with those charged with governance. In applying this standard the auditor shall apply professional judgement, using knowledge of the legal requirements and corporate governance practices of New Zealand as well as the particular engagement circumstances, to determine whether the requirements of this standard apply to management or those charged with governance or both.

Effective Date

2. This ISA (NZ) is effective for audits of financial statements for periods beginning on or after 1 September, 2011. [Note: For the effective dates of paragraphs changed or added by an Amending Standard see the History of Amendments].

1ISA (NZ) 220 (Revised), Quality Management for an Audit of Financial Statements.

3. The objective of the auditor is to accept or continue an audit engagement only when the basis upon which it is to be performed has been agreed, through:

  1. Establishing whether the preconditions for an audit are present; and

  2. Confirming that there is a common understanding between the auditor and management and, where appropriate those charged with governance of the terms of the audit engagement.

4. For purposes of the ISAs (NZ), the following term has the meaning attributed below:

  • Preconditions for an audit – The use by management of an acceptable financial reporting framework in the preparation of the financial statements and the agreement of management and, where appropriate, those charged with governance to the premise2 on which an audit is conducted.

5. For the purposes of this ISA (NZ), references to “management” should be read hereafter as “management and, where appropriate, those charged with governance.”

2ISA (NZ) 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing (New Zealand), paragraph 13.

Preconditions for an Audit

6. [Amended by the NZAuASB].

NZ6.1 In order to establish whether the preconditions for an audit are present, the auditor shall:

  1. Determine whether the financial reporting framework to be applied in the preparation of the financial statements is acceptable; and (Ref: Para. A2-A10)

  2. Obtain the agreement of those charged with governance that they acknowledge and understand their responsibility: (Ref: Para A11-A14, A21)

    1. For the preparation of the financial statements in accordance with the applicable financial reporting framework, including where relevant their fair presentation; (Ref: Para. A15)

    2. For such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; and (Ref: Para. A16-A19)

    3. To provide the auditor with:

a. Access to all information of which management is aware that is relevant to the preparation of the financial statements such as records, documentation and other matters;

b. Additional information that the auditor may request from management for the purpose of the audit; and (Ref: Para. A20)

c. Unrestricted access to persons within the entity from whom the auditor determines it necessary to obtain audit evidence.

Limitation on Scope Prior to Audit Engagement Acceptance

7. If management or those charged with governance impose a limitation on the scope of the auditor’s work in the terms of a proposed audit engagement such that the auditor believes the limitation will result in the auditor disclaiming an opinion on the financial statements, the auditor shall not accept such a limited engagement as an audit engagement, unless required by law or regulation to do so.

Other Factors Affecting Audit Engagement Acceptance

8. If the preconditions for an audit are not present, the auditor shall discuss the matter with management. Unless required by law or regulation to do so, the auditor shall not accept the proposed audit engagement:

  1. If the auditor has determined that the financial reporting framework to be applied in the preparation of the financial statements is unacceptable, except as provided in paragraph 19; or

  2. If the agreement referred to in paragraph 6(b) has not been obtained.

Agreement on Audit Engagement Terms

9. [Amended by the NZAuASB.]

NZ9.1 The auditor shall agree the terms of the audit engagement with those charged with governance. (Ref: Para. A22)

10. [Amended by the NZAuASB.]

NZ10.1 Subject to paragraph 11, the agreed terms of the audit engagement shall be recorded in an audit engagement letter or other suitable form of written agreement and shall include: (Ref: Para. A23-A27)

  1. The objective and scope of the audit of the financial statements;

  2. The responsibilities of the auditor;

  3. The responsibilities of those charged with governance;

  4. Identification of the applicable financial reporting framework for the preparation of the financial statements; and

  5. Reference to the expected form and content of any reports to be issued by the auditor; and (Ref: Para A24)

  6. A statement that there may be circumstances in which a report may differ from its expected form and content.

11. If law or regulation prescribes in sufficient detail the terms of the audit engagement referred to in paragraph 10, the auditor need not record them in a written agreement, except for the fact that such law or regulation applies and that management acknowledges and understands its responsibilities as set out in paragraph 6(b). (Ref: Para. A23, A28-A29)

12. If law or regulation prescribes responsibilities of management similar to those described in paragraph 6(b), the auditor may determine that the law or regulation includes responsibilities that, in the auditor’s judgement, are equivalent in effect to those set out in that paragraph. For such responsibilities that are equivalent, the auditor may use the wording of the law or regulation to describe them in the written agreement. For those responsibilities that are not prescribed by law or regulation such that their effect is equivalent, the written agreement shall use the description in paragraph 6(b). (Ref: Para. A28)

Recurring Audits

13. On recurring audits, the auditor shall assess whether circumstances require the terms of the audit engagement to be revised and whether there is a need to remind the entity of the existing terms of the audit engagement. (Ref: Para. A30)

Acceptance of a Change in the Terms of the Audit Engagement

14. The auditor shall not agree to a change in the terms of the audit engagement where there is no reasonable justification for doing so. (Ref: Para. A31-A33)

15. If, prior to completing the audit engagement, the auditor is requested to change the audit engagement to an engagement that conveys a lower level of assurance, the auditor shall determine whether there is reasonable justification for doing so. (Ref: Para. A34-A35)

16. If the terms of the audit engagement are changed, the auditor and management shall agree on and record the new terms of the engagement in an engagement letter or other suitable form of written agreement.

17. If the auditor is unable to agree to a change of the terms of the audit engagement and is not permitted by management to continue the original audit engagement, the auditor shall:

  1. Withdraw from the audit engagement where possible under applicable law or regulation; and

  2. Determine whether there is any obligation, either contractual or otherwise, to report the circumstances to other parties, such as those charged with governance, owners or regulators.

Additional Considerations in Engagement Acceptance

Financial Reporting Standards Supplemented by Law or Regulation

18. If financial reporting standards established by an authorised or recognised standards setting organisation are supplemented by law or regulation, the auditor shall determine whether there are any conflicts between the financial reporting standards and the additional requirements. If such conflicts exist, the auditor shall discuss with management the nature of the additional requirements and shall agree whether:

  1. The additional requirements can be met through additional disclosures in the financial statements; or

  2. The description of the applicable financial reporting framework in the financial statements can be amended accordingly.

If neither of the above actions is possible, the auditor shall determine whether it will be necessary to modify the auditor’s opinion in accordance with ISA (NZ) 705 (Revised).3 (Ref: Para. A36)

Financial Reporting Framework Prescribed by Law or Regulation—Other Matters Affecting Acceptance

19. If the auditor has determined that the financial reporting framework prescribed by law or regulation would be unacceptable but for the fact that it is prescribed by law or regulation, the auditor shall accept the audit engagement only if the following conditions are present: (Ref: Para. A37)

  1. Management agrees to provide additional disclosures in the financial statements required to avoid the financial statements being misleading; and

  2. It is recognised in the terms of the audit engagement that:

    1. The auditor’s report on the financial statements will incorporate an Emphasis of Matter paragraph, drawing users’ attention to the additional disclosures, in accordance with ISA (NZ) 706 (Revised);4 and

    2. Unless the auditor is required by law or regulation to express the auditor’s opinion on the financial statements by using the phrases “present fairly, in all material respects,” or “give a true and fair view” in accordance with the applicable financial reporting framework, the auditor’s opinion on the financial statements will not include such phrases.

20. If the conditions outlined in paragraph 19 are not present and the auditor is required by law or regulation to undertake the audit engagement, the auditor shall:

  1. Evaluate the effect of the misleading nature of the financial statements on the auditor’s report; and

  2. Include appropriate reference to this matter in the terms of the audit engagement.

Auditor’s Report Prescribed by Law or Regulation

21. In some cases, law or regulation of the relevant jurisdiction prescribes the layout or wording of the auditor’s report in a form or in terms that are significantly different from the requirements of ISAs (NZ). In these circumstances, the auditor shall evaluate:

  1. Whether users might misunderstand the assurance obtained from the audit of the financial statements and, if so,

  2. Whether additional explanation in the auditor’s report can mitigate possible misunderstanding.5

If the auditor concludes that additional explanation in the auditor’s report cannot mitigate possible misunderstanding, the auditor shall not accept the audit engagement, unless required by law or regulation to do so. An audit conducted in accordance with such law or regulation does not comply with ISAs (NZ). Accordingly, the auditor shall not include any reference within the auditor’s report to the audit having been conducted in accordance with ISAs (NZ).6 (Ref: Para. A38-A39)

NZ21.1 Professional and Ethical Standard 1,7 requires assurance practitioners to comply with Auditing Standards; therefore auditors shall not sign an audit report that does not conform to the requirements of this ISA (NZ). In the extremely rare situation described in paragraph 21, the auditor shall attach a separate report that conforms to the requirements of this ISA (NZ).

3ISA (NZ) 705 (Revised), Modifications to the Opinion in the Independent Auditor’s Report.

4ISA (NZ) 706 (Revised), Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report.

6See also ISA (NZ) 700 (Revised), Forming an Opinion and Reporting on Financial Statements, paragraph 50.

7Professional and Ethical Standard 1, International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand)

Scope of this ISA (NZ) (Ref: Para. 1)

A1. Professional and Ethical Standard 38 deals with the firm’s responsibilities regarding the acceptance and continuance of client relationships and specific engagements. The auditor’s responsibilities in respect of relevant ethical requirements, including those related to independence, in the context of the acceptance of an audit engagement and insofar as they are within the control of the auditor are dealt with in ISA (NZ) 220 (Revised).9 This ISA (NZ) deals with those matters (or preconditions) that are within the control of the entity and upon which it is necessary for the auditor and the entity’s management to agree.

Preconditions for an Audit

The Financial Reporting Framework (Ref: Para. 6(a))

A2. A condition for acceptance of an assurance engagement is that the criteria referred to in the definition of an assurance engagement are suitable and available to intended users. Criteria are the benchmarks used to evaluate or measure the subject matter including, where relevant, benchmarks for presentation and disclosure. Suitable criteria enable reasonably consistent evaluation or measurement of a subject matter within the context of professional judgement. For purposes of the ISAs (NZ), the applicable financial reporting framework provides the criteria the auditor uses to audit the financial statements, including where relevant their fair presentation.

A3. Without an acceptable financial reporting framework, management does not have an appropriate basis for the preparation of the financial statements and the auditor does not have suitable criteria for auditing the financial statements. In many cases the auditor may presume that the applicable financial reporting framework is acceptable, as described in paragraphs A8-A9.

Determining the Acceptability of the Financial Reporting Framework

A4. Factors that are relevant to the auditor’s determination of the acceptability of the financial reporting framework to be applied in the preparation of the financial statements include:

  • The nature of the entity (for example, whether it is a business enterprise, a public sector entity or a not for profit organisation);

  • The purpose of the financial statements (for example, whether they are prepared to meet the common financial information needs of a wide range of users or the financial information needs of specific users);

  • The nature of the financial statements (for example, whether the financial statements are a complete set of financial statements or a single financial statement); and

  • Whether law or regulation prescribes the applicable financial reporting framework.

A5. Many users of financial statements are not in a position to demand financial statements tailored to meet their specific information needs. While all the information needs of specific users cannot be met, there are financial information needs that are common to a wide range of users. Financial statements prepared in accordance with a financial reporting framework designed to meet the common financial information needs of a wide range of users are referred to as general purpose financial statements.

A6. In some cases, the financial statements will be prepared in accordance with a financial reporting framework designed to meet the financial information needs of specific users. Such financial statements are referred to as special purpose financial statements. The financial information needs of the intended users will determine the applicable financial reporting framework in these circumstances. ISA (NZ) 800 discusses the acceptability of financial reporting frameworks designed to meet the financial information needs of specific users.10

A7. Deficiencies in the applicable financial reporting framework that indicate that the framework is not acceptable may be encountered after the audit engagement has been accepted. When use of that framework is prescribed by law or regulation, the requirements of paragraphs 19-20 apply. When use of that framework is not prescribed by law or regulation, management may decide to adopt another framework that is acceptable. When management does so, as required by paragraph 16, new terms of the audit engagement are agreed to reflect the change in the framework as the previously agreed terms will no longer be accurate.

General purpose frameworks
A8. At present, there is no objective and authoritative basis that has been generally recognised globally for judging the acceptability of general purpose frameworks. In the absence of such a basis, financial reporting standards established by organisations that are authorised or recognised to promulgate standards to be used by certain types of entities are presumed to be acceptable for general purpose financial statements prepared by such entities, provided the organisations follow an established and transparent process involving deliberation and consideration of the views of a wide range of stakeholders. Examples of such financial reporting standards include:
  • International Financial Reporting Standards (IFRSs) promulgated by the International Accounting Standards Board;

  • International Public Sector Accounting Standards (IPSASs) promulgated by the International Public Sector Accounting Standards Board; and

  • Accounting principles promulgated by an authorised or recognised standards setting organisation in a particular jurisdiction, provided the organisation follows an established and transparent process involving deliberation and consideration of the views of a wide range of stakeholders.

NZA8.1 Examples of applicable financial reporting requirements that apply in New Zealand include:

  • New Zealand equivalents to International Financial Reporting Standards (NZ IFRS);

  • New Zealand equivalents to International Financial Reporting Standards Reduced Disclosure Regime (NZ IFRS RDR);

  • Public Benefit Entity Standards (PBE Standards);

  • Public Benefit Entity Standards Reduced Disclosure Regime (PBE Standards RDR);

  • Reporting Requirements for Tier 3 Public Sector Entities (Tier 3 (PS) Standard);

  • Reporting Requirements for Tier 3 Not-for-Profit Entities (Tier 3 (NFP) Standard);

  • Reporting Requirements for Tier 4 Public Sector Entities (Tier 4 (PS) Standard);

  • Reporting Requirements for Tier 4 Not-for-Profit Entities (Tier 4 (NFP) Standard)

These financial reporting standards are often identified as the applicable financial reporting framework in law or regulation governing the preparation of general purpose financial statements.

Financial reporting frameworks prescribed by law or regulation

A9. In accordance with paragraph 6(a), the auditor is required to determine whether the financial reporting framework, to be applied in the preparation of the financial statements, is acceptable. In some jurisdictions, law or regulation may prescribe the financial reporting framework to be used in the preparation of general purpose financial statements for certain types of entities. In the absence of indications to the contrary, such a financial reporting framework is presumed to be acceptable for general purpose financial statements prepared by such entities. In the event that the framework is not considered to be acceptable, paragraphs 19-20 apply.

Jurisdictions that do not have standards setting organisations or prescribed financial reporting frameworks

A10. When an entity is registered or operating in a jurisdiction outside New Zealand that does not have an authorised or recognised standards setting organisation, or where use of the financial reporting framework is not prescribed by law or regulation, management identifies a financial reporting framework to be applied in the preparation of the financial statements. Appendix 2 contains guidance on determining the acceptability of financial reporting frameworks in such circumstances.

Agreement of the Responsibilities of Management (Ref: Para. 6(b))

A11. An audit in accordance with ISAs (NZ) is conducted on the premise that management has acknowledged and understands that it has the responsibilities set out in paragraph 6(b).11 In certain jurisdictions, such responsibilities may be specified in law or regulation. In others, there may be little or no legal or regulatory definition of such responsibilities. ISAs (NZ) do not override law or regulation in such matters. However, the concept of an independent audit requires that the auditor’s role does not involve taking responsibility for the preparation of the financial statements or for the entity’s related internal control, and that the auditor has a reasonable expectation of obtaining the information necessary for the audit (including information obtained from outside of the general and subsidiary ledgers) in so far as management is able to provide or procure it. Accordingly, the premise is fundamental to the conduct of an independent audit. To avoid misunderstanding, agreement is reached with management that it acknowledges and understands that it has such responsibilities as part of agreeing and recording the terms of the audit engagement in paragraphs 9-12.

A12. The way in which the responsibilities for financial reporting are divided between management and those charged with governance will vary according to the resources and structure of the entity and any relevant law or regulation, and the respective roles of management and those charged with governance within the entity. In most cases, management is responsible for execution while those charged with governance have oversight of management. In some cases, those charged with governance will have, or will assume, responsibility for approving the financial statements or monitoring the entity’s internal control related to financial reporting. In larger or public entities, a subgroup of those charged with governance, such as an audit committee, may be charged with certain oversight responsibilities.

A13. [Amended by the NZAuASB.]

NZA13.1 ISA (NZ) 580 requires the auditor to request those charged with governance to provide written representations that they have fulfilled certain of their responsibilities.12 It may therefore be appropriate to make those charged with governance aware that receipt of such written representations will be expected, together with written representations required by other ISAs (NZ) and, where necessary, written representations to support other audit evidence relevant to the financial statements or one or more specific assertions in the financial statements.

A14. [Amended by the NZAuASB.]

NZA14.1 Where those charged with governance will not acknowledge their responsibilities, or agree to provide the written representations, the auditor will be unable to obtain sufficient appropriate audit evidence.13 In such circumstances, it would not be appropriate for the auditor to accept the audit engagement, unless law or regulation requires the auditor to do so. In cases where the auditor is required to accept the audit engagement, the auditor may need to explain to management the importance of these matters, and the implications for the auditor’s report.

Preparation of the Financial Statements (Ref: Para 6(b)(i))

A15. Most financial reporting frameworks include requirements relating to the presentation of the financial statements; for such frameworks, preparation of the financial statements in accordance with the financial reporting framework includes presentation. In the case of a fair presentation framework the importance of the reporting objective of fair presentation is such that the premise agreed with management includes specific reference to fair presentation, or to the responsibility to ensure that the financial statements will “give a true and fair view” in accordance with the financial reporting framework.

Internal Control (Ref: Para. 6(b)(ii))

A16. Management maintains such internal control as it determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Internal control, no matter how effective, can provide an entity with only reasonable assurance about achieving the entity’s financial reporting objectives due to the inherent limitations of internal control.14

A17. An independent audit conducted in accordance with the ISAs (NZ) does not act as a substitute for the maintenance of internal control necessary for the preparation of financial statements by management. Accordingly, the auditor is required to obtain the agreement of management that it acknowledges and understands its responsibility for internal control. However, the agreement required by paragraph 6(b)(ii) does not imply that the auditor will find that internal control maintained by management has achieved its purpose or will be free of deficiencies.

A18. It is for management to determine what internal control is necessary to enable the preparation of the financial statements. The term “internal control” encompasses a wide range of activities within components of the system of internal control that may be described as the control environment; the entity’s risk assessment process; the entity’s process to monitor the system of internal control, the information system and communication; and control activities. This division, however, does not necessarily reflect how a particular entity may design, implement and maintain its internal control, or how it may classify any particular component.15 An entity’s internal control (in particular, its accounting books and records, or accounting systems) will reflect the needs of management, the complexity of the business, the nature of the risks to which the entity is subject, and relevant laws or regulation.

A19. In some jurisdictions, law or regulation may refer to the responsibility of management for the adequacy of accounting books and records, or accounting systems. In some cases, general practice may assume a distinction between accounting books and records or accounting systems on the one hand, and internal control or controls on the other. As accounting books and records, or accounting systems, are an integral part of internal control as referred to in paragraph A18, no specific reference is made to them in paragraph 6(b)(ii) for the description of the responsibility management. To avoid misunderstanding, it may be appropriate for the auditor to explain to management the scope of this responsibility.

Additional Information (Ref: Para. 6(b)(iii)(b))

A20. Additional information that the auditor may request from management for the purpose of the audit may include when applicable, matters related to other information in accordance with ISA (NZ) 720 (Revised). When the auditor expects to obtain other information after the date of the auditor’s report, the terms of the audit engagement may also acknowledge the auditor’s responsibilities relating to such other information including, if applicable, the actions that may be appropriate or necessary if the auditor concludes that a material misstatement of the other information exists in other information obtained after the date of the auditor’s report.

Considerations Relevant to Smaller Entities (Ref: Para. 6(b))

A21. One of the purposes of agreeing the terms of the audit engagement is to avoid misunderstanding about the respective responsibilities of management and the auditor. For example, when a third party has assisted with the preparation of the financial statements, it may be useful to remind management that the preparation of the financial statements in accordance with the applicable financial reporting framework remains its responsibility.

Agreement on Audit Engagement Terms

Agreeing the Terms of the Audit Engagement (Ref: Para. 9)

A22. The roles of management and those charged with governance in agreeing the terms of the audit engagement for the entity depend on the governance structure of the entity and relevant law or regulation.

Audit Engagement Letter or Other Form of Written Agreement16 (Ref: Para. 10-11)

A23. It is in the interests of both the entity and the auditor that the auditor sends an audit engagement letter before the commencement of the audit to help avoid misunderstandings with respect to the audit. In some countries, however, the objective and scope of an audit and the responsibilities of management and of the auditor may be sufficiently established by law, that is, they prescribe the matters described in paragraph 10. Although in these circumstances paragraph 11 permits the auditor to include in the engagement letter only reference to the fact that relevant law or regulation applies and that management acknowledges and understands its responsibilities as set out in paragraph 6(b), the auditor may nevertheless consider it appropriate to include the matters described in paragraph 10 in an engagement letter for the information of management.

Form and Content of the Audit Engagement Letter

A24. [Amended by the NZAuASB.]

NZA24.1 The form and content of the audit engagement letter may vary for each entity. Information included in the audit engagement letter on the auditor’s responsibilities may be based on ISA (NZ) 200.17 Paragraphs 6(b) and 12 of this ISA (NZ) deal with the description of the responsibilities of management. In addition to including the matters required by paragraph 10, an audit engagement letter may make reference to, for example:

  • Elaboration of the scope of the audit, including reference to applicable legislation, regulations, ISAs (NZ), and the Professional and Ethical Standards, and other pronouncements of professional bodies to which the auditor adheres.

  • The form of any other communication of results of the audit engagement.

  • The requirement for the auditor to communicate key audit matters in the auditor’s report in accordance with ISA (NZ) 701.18

  • The fact that because of the inherent limitations of an audit, together with the inherent limitations of internal control, there is an unavoidable risk that some material misstatements may not be detected, even though the audit is properly planned and performed in accordance with ISAs (NZ).

  • Arrangements regarding the planning and performance of the audit, including the composition of the engagement team.

  • The expectation that those charged with governance will provide written representations (see also paragraph A13).

  • The expectation that management, will provide access to all information of which management is aware that is relevant to the preparation of the financial statements, including an expectation that management will provide access to information relevant to disclosures.

  • The agreement of management to make available to the auditor draft financial statements, including all information relevant to their preparation, whether obtained from within or outside of the general and subsidiary ledgers (including all information relevant to the preparation of disclosures), and the other information19, if any, in time to allow the auditor to complete the audit in accordance with the proposed timetable.

  • The agreement of management to inform the auditor of facts that may affect the financial statements, of which management may become aware during the period from the date of the auditor’s report to the date the financial statements are issued.

  • The basis on which fees are computed and any billing arrangements.

  • A request for management to acknowledge receipt of the audit engagement letter and to agree to the terms of the engagement outlined therein.

A25. When the auditor is not required to communicate key audit matters, it may be helpful for the auditor to make reference in the terms of the audit engagement to the possibility of communicating key audit matters in the auditor’s report and, it may be necessary for the auditor to include a reference to such possibility in order to retain the ability to do so.

A26. When relevant, the following points could also be made in the audit engagement letter:

  • Arrangements concerning the involvement of other auditors and experts in some aspects of the audit.

  • Arrangements concerning the involvement of internal auditors and other staff of the entity.

  • Arrangements to be made with the predecessor auditor, if any, in the case of an initial audit.

  • A reference to, and description of, the auditor’s responsibilities under law, regulation or relevant ethical requirements that address reporting identified or suspected non-compliance with laws and regulations to an appropriate authority outside the entity.

  • Any restriction of the auditor’s liability when such possibility exists.

  • A reference to any further agreements between the auditor and the entity.

  • Any obligations to provide audit working papers to other parties. 

An example of an audit engagement letter is set out in Appendix 1.

Audits of Components

A27. When the auditor of a parent entity is also the auditor of a component, the factors that may influence the decision whether to send a separate audit engagement letter to the component include the following:

  • Who appoints the component auditor;

  • Whether a separate auditor’s report is to be issued on the component;

  • Legal requirements in relation to audit appointments;

  • Degree of ownership by parent; and

  • Degree of independence of the component management from the parent entity.

Responsibilities of Management Prescribed by Law or Regulation (Ref: Para. 11-12)

A28. If, in the circumstances described in paragraphs A23 and A29, the auditor concludes that it is not necessary to record certain terms of the audit engagement in an audit engagement letter, the auditor is still required by paragraph 11 to seek the written agreement from management that it acknowledges and understands that it has the responsibilities set out in paragraph 6(b). However, in accordance with paragraph 12, such written agreement may use the wording of the law or regulation if such law or regulation establishes responsibilities for management that are equivalent in effect to those described in paragraph 6(b). The accounting profession, audit standards setter, or audit regulator in a jurisdiction may have provided guidance as to whether the description in law or regulation is equivalent.

Considerations specific to public sector entities

A29. Law or regulation governing the operations of public sector audits generally mandate the appointment of a public sector auditor and commonly set out the public sector auditor’s responsibilities and powers, including the power to access an entity’s records and other information. When law or regulation prescribes in sufficient detail the terms of the audit engagement, the public sector auditor may nonetheless consider that there are benefits in issuing a fuller audit engagement letter than permitted by paragraph 11.

Recurring Audits (Ref: Para. 13)

A30. The auditor may decide not to send a new audit engagement letter or other written agreement each period. However, the following factors may make it appropriate to revise the terms of the audit engagement or to remind the entity of existing terms:

  • Any indication that the entity misunderstands the objective and scope of the audit.

  • Any revised or special terms of the audit engagement.

  • A recent change of senior management.

  • A significant change in ownership.

  • A significant change in nature or size of the entity’s business.

  • A change in legal or regulatory requirements.

  • A change in the financial reporting framework adopted in the preparation of the financial statements.

  • A change in other reporting requirements.

Acceptance of a Change in the Terms of the Audit Engagement

Request to Change the Terms of the Audit Engagement (Ref: Para. 14)

A31. A request from the entity for the auditor to change the terms of the audit engagement may result from a change in circumstances affecting the need for the service, a misunderstanding as to the nature of an audit as originally requested or a restriction on the scope of the audit engagement, whether imposed by management or caused by other circumstances. The auditor, as required by paragraph 14, considers the justification given for the request, particularly the implications of a restriction on the scope of the audit engagement.

A32. A change in circumstances that affects the entity’s requirements or a misunderstanding concerning the nature of the service originally requested may be considered a reasonable basis for requesting a change in the audit engagement.

A33. In contrast, a change may not be considered reasonable if it appears that the change relates to information that is incorrect, incomplete or otherwise unsatisfactory. An example might be where the auditor is unable to obtain sufficient appropriate audit evidence regarding receivables and the entity asks for the audit engagement to be changed to a review engagement to avoid a qualified opinion or a disclaimer of opinion.

Request to Change to a Review or a Related Service (Ref: Para. 15)

A34. Before agreeing to change an audit engagement to a review or a related service, an auditor who was engaged to perform an audit in accordance with ISAs (NZ) may need to assess, in addition to the matters referred to in paragraphs A31-A33 above, any legal or contractual implications of the change.

A35. If the auditor concludes that there is reasonable justification to change the audit engagement to a review or a related service, the audit work performed to the date of change may be relevant to the changed engagement; however, the work required to be performed and the report to be issued would be those appropriate to the revised engagement. In order to avoid confusing the reader, the report on the related service would not include reference to:

  1. The original audit engagement; or

  2. Any procedures that may have been performed in the original audit engagement, except where the audit engagement is changed to an engagement to undertake agreed-upon procedures and thus reference to the procedures performed is a normal part of the report.

Additional Considerations in Engagement Acceptance

Financial Reporting Standards Supplemented by Law or Regulation (Ref: Para. 18)

A36. In some jurisdictions, law or regulation may supplement the financial reporting standards established by an authorised or recognised standards setting organisation with additional requirements relating to the preparation of financial statements. In those jurisdictions, the applicable financial reporting framework for the purposes of applying the ISAs (NZ) encompasses both the identified financial reporting framework and such additional requirements provided they do not conflict with the identified financial reporting framework. This may, for example, be the case when law or regulation prescribes disclosures in addition to those required by the financial reporting standards or when they narrow the range of acceptable choices that can be made within the financial reporting standards.20

Financial Reporting Framework Prescribed by Law or Regulation—Other Matters Affecting Acceptance (Ref: Para. 19)

A37. Law or regulation may prescribe that the wording of the auditor’s opinion use the phrases “present fairly, in all material respects” or “give a true and fair view of …” in a case where the auditor concludes that the applicable financial reporting framework prescribed by law or regulation would otherwise have been unacceptable. In this case, the terms of the prescribed wording of the auditor’s report are significantly different from the requirements of ISAs (NZ) (see paragraph 21).

Auditor’s Report Prescribed by Law or Regulation (Ref: Para. 21)

A38. ISAs (NZ) require that the auditor shall not represent compliance with ISAs (NZ) unless the auditor has complied with all of the ISAs (NZ) relevant to the audit.21 When law or regulation prescribes the layout or wording of the auditor’s report in a form or in terms that are significantly different from the requirements of ISAs (NZ) and the auditor concludes that additional explanation in the auditor’s report cannot mitigate possible misunderstanding, the auditor may consider including a statement in the auditor’s report that the audit is not conducted in accordance with ISAs (NZ). The auditor is, however, encouraged to apply ISAs (NZ), including the ISAs (NZ) that address the auditor’s report, to the extent practicable, notwithstanding that the auditor is not permitted to refer to the audit being conducted in accordance with ISAs (NZ).

Considerations Specific to Public Sector Entities

A39. In the public sector, specific requirements may exist within the legislation governing the audit mandate; for example, the auditor may be required to report directly to a minister, the legislature or the public if the entity attempts to limit the scope of the audit.

8 Professional and Ethical Standard 3, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, paragraph 30

9ISA (NZ) 220 (Revised), paragraphs 16-21.

10 ISA (NZ) 800, Special Considerations—Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks, paragraph 8.

11ISA (NZ) 200, paragraph A2.

12ISA (NZ) 580, Written Representations, paragraphs 10-11.

13ISA (NZ) 580, paragraph A26.

14ISA (NZ) 315 (Revised 2019), “Identifying and Assessing the Risks of Material Misstatement” paragraph 22 and Appendix 3.

15ISA (NZ) 315 (Revised 2019), paragraph A91 and Appendix 3.

16In the paragraphs that follow, any reference to an audit engagement letter is to be taken as a reference to an audit engagement letter or other suitable form of written agreement.

17ISA (NZ) 200, paragraphs 3-9.

18ISA (NZ) 701, Communication Key Audit Matters in the Independent Auditor’s Report.

19As defined in ISA (NZ) 720 (Revised), The Auditor’s Responsibilities Relating to Other Information.

20ISA (NZ) 700 (Revised), paragraph 15, includes a requirement regarding the evaluation of whether the financial statements adequately refer to or describe the applicable financial reporting framework.

21ISA (NZ) 200, paragraph 20.

(Ref: Paras. A24-26)

Example of an Audit Engagement Letter

The following is an example of an audit engagement letter for an audit of general purpose financial statements prepared in accordance with New Zealand equivalents to International Financial Reporting Standards. This letter is not authoritative but is intended only to be a guide that may be used in conjunction with the considerations outlined in this ISA (NZ). It will need to be varied according to individual requirements and circumstances. It is drafted to refer to the audit of financial statements for a single reporting period and would require adaptation if intended or expected to apply to recurring audits (see paragraph 13 of this ISA (NZ)). It may be appropriate to seek legal advice that any proposed letter is suitable.

*** To the Board of Directors of ABC Company:22 [The objective and scope of the audit]

You23 have requested that we audit the financial statements of ABC Company, which comprise the statement of financial position as at December 31, 20X1, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information. We are pleased to confirm our acceptance and our understanding of this audit engagement by means of this letter.

The objectives of our audit are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

[The responsibilities of the auditor]

We will conduct our audit in accordance with ISAs (NZ). Those standards require that we comply with ethical requirements. As part of an audit in accordance with ISAs (NZ), we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

  • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

  • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control24. However, we will communicate to you in writing concerning any significant deficiencies in internal control relevant to the audit of the financial statements that we have identified during the audit.

  • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

  • Conclude on the appropriateness of the use of the going concern basis of accounting by those charged with governance and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

  • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Because of the inherent limitations of an audit, together with the inherent limitations of internal control, there is an unavoidable risk that some material misstatements may not be detected, even though the audit is properly planned and performed in accordance with ISAs (NZ).

[The responsibilities of the directors and identification of the applicable financial reporting framework (for purposes of this example it is assumed that the auditor has not determined that the law or regulation prescribes those responsibilities in appropriate terms; the descriptions in paragraph 6(b) of this ISA (NZ) are therefore used).]

Our audit will be conducted on the basis that [those charged with governance]25 acknowledge and understand that they have responsibility on behalf of the entity:

  1. For the preparation and fair presentation of the financial statements in accordance with New Zealand equivalents to International Financial Reporting Standards26;

  2. For such internal control as [they] determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error;

  3. To provide us with27:

    1. Access to all information of which [management and the directors] are aware that is relevant to the preparation of the financial statements such as records, documentation and other matters;

    2. Additional information that we may request from [management or the directors] for the purpose of the audit; and

    3. Unrestricted access to persons within the entity from whom we determine it necessary to obtain audit evidence.

     

As part of our audit process, we will request from [the directors], written confirmation concerning representations made to us in connection with the audit.

We look forward to full cooperation from your staff during our audit. [Other relevant information]

[Insert other information, such as fee arrangements, billings and other specific terms, as appropriate.]

[Reporting]

[Insert appropriate reference to the expected form and content of the auditor’s report including, if applicable, the reporting on other information in accordance with ISA (NZ) 720 (Revised)]

The form and content of our report may need to be amended in the light of our audit findings.

Please sign and return the attached copy of this letter to indicate your acknowledgement of, and agreement with, the arrangements for our audit of the financial statements including our respective responsibilities.

Acknowledged and agreed on behalf of ABC Company by (signed)

......................

Name and Title Date

22The addressees and references in the letter would be those that are appropriate in the circumstances of the engagement. It is important to refer to the appropriate persons – see paragraph A22.

23 Throughout this letter, references to “you,” “we,” “us,” “management,” “those charged with governance” and “auditor” would be used or amended as appropriate in the circumstances.

24This sentence would be modified, as appropriate, in circumstances when the auditor also has responsibility to issue an opinion on the effectiveness of internal control in conjunction with the audit of the financial statements.

25Use terminology as appropriate in the circumstances, for example the directors, trustees or equivalent.

26Or if appropriate, “For the preparation of financial statements that give a true and fair view in accordance with New Zealand equivalents to International Financial Reporting Standards.”

27See paragraph A24 for examples of other matters relating to the responsibilities of those charged with governance that may be included.

28 Professional and Ethical Standard 1 (Revised), “Code of Ethics for Assurance Practitioners”.

(Ref: Para. A10)

Determining the Acceptability of General Purpose Frameworks

Jurisdictions that Do Not Have Authorised or Recognised Standards Setting Organisations or Financial Reporting Frameworks Prescribed by Law or Regulation

1. As explained in paragraph A10 of this ISA (NZ), when an entity is registered or operating outside New Zealand in a jurisdiction that does not have an authorised or recognised standards setting organisation, or where use of the financial reporting framework is not prescribed by law or regulation, management identifies an applicable financial reporting framework. Practice in such jurisdictions is often to use the financial reporting standards established by one of the organisations described in paragraph A8 of this ISA (NZ).

2. Alternatively, there may be established accounting conventions in a particular jurisdiction that are generally recognised as the financial reporting framework for general purpose financial statements prepared by certain specified entities operating in that jurisdiction. When such a financial reporting framework is adopted, the auditor is required by paragraph 6(a) of this ISA (NZ) to determine whether the accounting conventions collectively can be considered to constitute an acceptable financial reporting framework for general purpose financial statements. When the accounting conventions are widely used in a particular jurisdiction, the accounting profession in that jurisdiction may have considered the acceptability of the financial reporting framework on behalf of the auditors. Alternatively, the auditor may make this determination by considering whether the accounting conventions exhibit attributes normally exhibited by acceptable financial reporting frameworks (see paragraph 3 below), or by comparing the accounting conventions to the requirements of an existing financial reporting framework considered to be acceptable (see paragraph 4 below).

3. Acceptable financial reporting frameworks normally exhibit the following attributes that result in information provided in financial statements that is useful to the intended users:

  1. Relevance, in that the information provided in the financial statements is relevant to the nature of the entity and the purpose of the financial statements. For example, in the case of a business enterprise that prepares general purpose financial statements, relevance is assessed in terms of the information necessary to meet the common financial information needs of a wide range of users in making economic decisions. These needs are ordinarily met by presenting the financial position, financial performance and cash flows of the business enterprise.

  2. Completeness, in that transactions and events, account balances and disclosures that could affect conclusions based on the financial statements are not omitted.

  3. Reliability, in that the information provided in the financial statements:

    1. Where applicable, reflects the economic substance of events and transactions and not merely their legal form; and

    2. Results in reasonably consistent evaluation, measurement, presentation and disclosure, when used in similar circumstances.

  4. Neutrality, in that it contributes to information in the financial statements that is free from bias.

  5. Understandability, in that the information in the financial statements is clear and comprehensive and not subject to significantly different interpretation.

4. The auditor may decide to compare the accounting conventions to the requirements of an existing financial reporting framework considered to be acceptable. For example, the auditor may compare the accounting conventions to IFRSs. For an audit of a small entity, the auditor may decide to compare the accounting conventions to a financial reporting framework specifically developed for such entities by an authorised or recognised standards setting organisation. When the auditor makes such a comparison and differences are identified, the decision as to whether the accounting conventions adopted in the preparation of the financial statements constitute an acceptable financial reporting framework includes considering the reasons for the differences and whether application of the accounting conventions, or the description of the financial reporting framework in the financial statements, could result in financial statements that are misleading.

5. A conglomeration of accounting conventions devised to suit individual preferences is not an acceptable financial reporting framework for general purpose financial statements. Similarly, a compliance framework will not be an acceptable financial reporting framework, unless it is generally accepted in the particular jurisdictions by preparers and users.

 

This conformity statement accompanies but is not part of ISA (NZ) 210.

Conformity with International Standards on Auditing

This International Standard on Auditing (New Zealand) (ISA (NZ)) conforms to International Standard on Auditing ISA 210 Agreeing the Terms of Audit Engagements, issued by the International Auditing and Assurance Standards Board (IAASB), an independent standard- setting board of the International Federation of Accountants (IFAC).

Paragraphs that have been added to this ISA (NZ) (and do not appear in the text of the equivalent ISA) are identified with the prefix “NZ”.

The following requirements are additional to ISA 210:

  • In New Zealand, those charged with governance generally have responsibility for ensuring an entity meets its legal obligations in relation to the preparation of the financial statements. In these cases the process of financial reporting is usually delegated to management, but the responsibility for such matters remains with those charged with governance. In applying this standard the auditor shall apply professional judgement, using knowledge of the legal requirements and corporate governance practices of New Zealand as well as the particular engagement circumstances, to determine whether the requirements of this standard apply to management or those charged with governance or both. (Ref: Para. NZ1.1)

  • Professional and Ethical Standard 1 (Revised),28 requires assurance practitioners to comply with Auditing Standards; therefore auditors shall not sign an audit report that does not conform to the requirements of this ISA (NZ). In the extremely rare situation described in paragraph 21, the auditor shall attach a separate report that conforms to the requirements of this ISA (NZ).

  • ISA 210 requires the auditor to agree the terms of the engagement with management. In addition, ISA 580 requires the auditor to obtain written representations from management. In New Zealand, the auditor is required to agree the terms of the engagement and obtain written representations from those charged with governance because the responsibility for the financial statements on behalf of the entity generally rests with those charged with governance. Paragraphs amended in this way have been labelled as NZ paragraphs to indicate all paragraphs amended by the NZAuASB.

This ISA (NZ) incorporates terminology and definitions used in New Zealand. Compliance with this ISA (NZ) enables compliance with ISA 210.

Comparison with Australian Auditing Standards

In Australia the Australian Auditing and Assurance Standards Board (AUASB) has issued Australian Auditing Standard ASA 210 Agreeing the Terms of Audit Engagements (Compiled).

ASA 210 conforms to ISA 210.